Letter of Credit (L/C) at Sight and Usance

[Abuzar Qazi]

What is the difference between at sight LC and Usance LC
and how both affects the exchange gain or loss........ Please Guide

[Abuzar Qazi]

Yaar koi hamen bhi guide karde..........Kamran bhai [(] hamen bhi kuch guidance de den

[ciapk]

Dears,

L/Cs may be classified as under
1. Sight - Letters of Credit (L/C - Sight)
2. Usance Letters of Credit (L/C - DA)

In case of L/C - Sight, the underlying draft is drawn at sight and the relevant documents are held by the Bank as security, until the same are retired.

In case of L/C - DA, the underlying draft is for a tenor stipulated in the L/C,payable by the customer on the due date. as 90 days etc

[theahmer]

AoA,
In simplest words, A sight LC means that whenever the Bill of Exchange is presented at counter, it must be paid then and there (ofcourse if the LC docx are in order).
While a Usance Bill is first presented then accepted and after that it is paid. Usance bills are usually for a period of 30, 60, 90 days.
So if a usance bill is of 30 days then it would be paid 30 days after presentation and acceptance.

Regards,